The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

Saturday, July 24, 2010

Ratting out your neighbors could have its rewards – at least when it comes to those living near crumbling, foreclosed homes. As CBS 2's Kristyn Hartman reports, tell the city about one and you could get paid – if an ordinance one alderman is set to propose, passes. "Our neighborhoods are becoming ghost towns," said Action Now President Michelle Young.

***

The problem is making someone maintain a place during the sometimes lengthy foreclosure process. Their plan would put it on the banks. Young said, "They wanted it back. They should maintain it."

Chicago's 3rd Ward Alderman Pat Dowell likes the idea so much, she's pitching it as part of a three-point plan. "It increases fines for neglect by almost five times," said Dowell. And if you report problem properties, you might get a finder's fee – 5 percent of the fine. So, rat on a neighbor and cash in. Dowell said, "What neighbor? It's ratting on the bank, and that's how it should be until they can show they can be more responsible." Dowell will propose the ordinance next week.

The roof is caving in on a Central Florida couple. Roger and Sharon Harrell share a roof with the condo next door to them, which has been posted as unsafe by the city. The Cape Canaveral couple said there's a big problem: the condo next door is in foreclosure and owned by the bank. The Harrells said they fear they'll lose everything over the bank's inaction. "This could be catastrophic," Sharon Harrell said.

She said she and her husband have spent thousands fixing the leaks that originate on the other side of the wall, under the same roof. City inspectors took photos of the ceiling falling in, black mold on the walls and attic trusses covered in black. "We could lose everything," Sharon Harrell said.

Banking giant JP Morgan Chase bought the damaged condo last year for $100. The city is fining Chase $250 a day for failing to make repairs. Those fines now add up to $60,250, and Harrell said Chase is ignoring all her pleas. She said she has also filed a lawsuit. A Chase spokesperson did not answer WESH 2's repeated questions.

Chase received and returned $25 billion in taxpayer bailout money. The Harrells said they thinks the bank can afford to fix the roof on its condo. "How many other people are they doing this to?" Sharon Harrell said.

Hundreds of buildings, from the South Bronx to central Brooklyn, whose renovation and rescue from ruinous debt were critical to the rebirth of blighted neighborhoods, are again in severe financial trouble. That poses a dilemma for the city, which began unloading the properties in the mid-1990s as part of an arduous effort to divest itself of thousands of decrepit buildings seized because of tax delinquencies.

Filled with unemployed tenants unable to make rent or mortgage payments and squeezed by soaring city fees, about 442 buildings are in serious default on property taxes and far behind on municipal bills. As the number of imperiled buildings grows, the city, struggling with its own cash shortage, faces unappealing choices. Seizing the buildings is not an option. The city’s previous role as a master landlord was widely deemed a disaster, with many buildings locked in chronic states of disrepair.

Instead, housing officials must either force deadbeat owners to pay their debts, or else foreclose on the buildings and find new owners in a harsh real estate climate. A total of $140 million is owed on the buildings, and nearly half of them have arrears of at least $3,000 of debt per unit, according to the city’s housing department. Many of the buildings are now slipping into the kind of shoddy conditions from which they had been saved.

Municipal Scandal Involving Shoddy Repairs Made Through City Home Improvement Program May Cost Family Its Residence

In Sandusky, Ohio, the Sandusky Register reports:

The city’s housing scandal might soon deliver one of its biggest blows. It may cost a family its home. Later this month, the foreclosure process will begin on 902 First St., where Derrick and LeAnn Close live with their two children and Derrick’s ill mother. The family blames the city for the possible foreclosure.

Between 2004 and 2006, malfeasance in the city’s housing department caused 41 homes in the Community Housing Improvement Program, better known as CHIP, to receive subpar repairs, or none at all. The program’s mission was to provide loan-interest [sic] loans and repairs to low-income families to improve their homes and neighborhoods. The Closes were one of the families that received subpar repairs.

Workers installed a faulty porch, bad electrical wiring, inefficient windows and ill-fitted doors, and did other shoddy work. The home still has exposed lead paint in its kitchen, and flakes of lead paint blanket the basement floor. In return for the work, the Closes now owe the city $33,000 as part of a lien on their home.

Last year, when the Closes fell on hard times, they asked the city to subordinate the lien, so they could refinance their home. Subordination means allowing a borrower to pay off other creditors first. [...] But the city rejected their subordination claim, and now they face foreclosure. The couple believes city officials turned their backs on them. “I don’t know what we’re going to do,” LeAnn says. “They didn’t fix our house. They made it worse. The least they could do is subordinate so we can refinance.”

Duo Accused Of NYC Summer Rental, Loft Living Ripoff Victimizing College Students, Others; Foreign Tourist Trio Left Stranded In U.S. Until Sept.

In Williamsburg, Brooklyn, the New York Post reports:

What seemed like a dream deal of spending the summer living in one of New York's hottest neighborhoods has become a nightmare for more than a dozen out-of-towners. Many of the victims - college students and young professionals - told the Post they were each duped out of thousands of dollars by two Brooklyn men posing as lease holders of a massive loft within a new luxury apartment complex at 175 Powers St. in Williamsburg.

The alleged scammers, Desmond Eaddy and Ronnie Barron, used Craigslist and other ads to reel in the unsuspecting victims, including eight from Ireland, and collected at least $14,000.

Left with empty pockets, many say they've spent the past month working odd jobs and scrambling just to raise enough cash for food and shelter. "This has been pretty traumatizing," said Neil Sturdy, 19, who traveled to the city with two other friends from Ireland. "We came to New York and were taken advantage of. Now we sometimes don't even have enough money to feed ourselves." The trio says they were taken for a total of $3,375 and that their pre-paid, nonrefundable return flight home isn't until September.

Friday, July 23, 2010

Rent-To-Own Deal Leaves Tenant As An Unwitting Squatter Out $5K After Doing Business With Home Hijacker Claiming Adverse Possession To Vacant Houses

In West Palm Beach, Florida, The Palm Beach Post reports:

Carole-Ann Higgs thought she was on a rent-to-own track when she signed up for a 12-month lease with the Wellington-based company Saving Palm Beach Homes Inc. In seven years, she was told, she and her husband would have a chance to buy the little home in Seminole Manor off Lantana Road as long as they took care of the property and agreed to pay $750 a month for the house "as is." It was an attractive offer to the growing family. But it may have made them unwitting squatters.

Four months after moving in and after they spent $5,000 on relocation and repair costs, they learned Saving Palm Beach Homes Inc. wasn't what they thought. The for-profit company incorporated in February by Wellington resident Mark Guerette didn't own the home, it didn't even manage the home, which has been in foreclosure since April 2008. A final judgment of $259,306 in favor of Chase Home Finance was awarded last month.

Instead, Guerette has been using a centuries-old law to take possession of foreclosed properties in Palm Beach and Broward counties - a dubious opportunity exacerbated by the real estate crash that flooded communities with vacant homes and often unclear rights of ownership.(1)

Reportedly, Guerette claimed adverse possession on dozens of homes in Broward County, but has since withdrawn the claims. In April, the Broward County State Attorney's Office charged the 46-year-old with one count of organized scheme to defraud over $20,000 for allegedly renting out six properties that he didn't own, the story states.

Residents in a Point Loma neighborhood are angry over the way a historic home that has been foreclosed is being used. The Bowman-Cotton House, a $5 million estate which dates back to the 1920s, overlooks San Diego Bay and is located at the foot of Nichols Street.

For many, the home is a dream wedding location thanks to its stunning views and spacious layout. However, the house has been foreclosed upon and the new owner can't move in. Weddings and receptions are being planned for the house, but they may never happen there.

Todd and Stacy Sabin lost the house to foreclosure and legally have no right to rent it out for special events. The city of San Diego issued a cease-and-desist order, and the issue has now made its way to court.

Attorney Grant Teeple represents the home's new owners and told 10News, "The city's told them, 'You can't have events and weddings.' They're selling that to people who have no clue, who go on the website, put down $5,000, $10,000, $15,000 deposit. [And] they're going to show up and find they can't have the event there. My predication is they won't be able to refund the money and won't be at the property."

Couples who booked their weddings at a luxurious Point Loma home may have to find a new venue quickly following a city decision regarding the multi-million dollar property. Prospective brides and grooms and their families were shocked and worried that their weddings may not happen as planned after the city of San Diego shut down the almost weekly rentals at the historic Bowman-Cotton House due to complaints from neighbors.

Racket Engages In "Paper Terrorism" Says Local Prosecutor About "Sovereign Citizen" Group Attempting To Steal Empty Houses Across North Georgia

In North Georgia, WSB-TV Channel 2 reports:

DeKalb County prosecutors say they’ve cracked open an elaborate attempt to steal empty houses across North Georgia. Channel 2 Action News teamed up with police and the FBI to share information uncovered during a monthlong investigation. So far, four people are in jail and police have arrest warrants for four others.

The suspects call themselves sovereign citizens. They are anti-government extremist and refuse to answer to state or local authority. The members often refuse to pay taxes or register their vehicles. Some told Channel 2 Investigative reporter, Jodie Fleischer, their homes are considered sovereign land. "Frankly, it's rather absurd the philosophies and techniques they're espousing, but people will buy into that and try it," said FBI Agent Steve Emmett.

Fleischer confronted Gregory and Linda Ross, who were living at a 5-bedroom home on South Goddard Road in DeKalb County. A deed posted in the window of the house claimed Jermaine Gibson owned the property. Records show the $1 million home is actually owned by a bank. Authorities say Gibson filed fraudulent paperwork to take the house around the same time the bank was forcing out the previous owners who were in foreclosure.

According to the deed, Gibson signed over the property to himself for free. Gibson has also filed paperwork declaring himself a sovereign citizen and immune to the laws of Georgia. [...] Prosecutors say the scheme can force real owners of the homes to prove it in court. Buyers are sometimes delayed from closing on houses. "They're able to tie up the legal system by filing bogus paperwork and engaging in paper terrorism against anybody who dare comes after them," said DeKalb County Assistant District Attorney John Melvin.

Alleged Rent Scammer Charged With Theft By Deception After Pocketing $1,000 From Unwitting Tenant For Foreclosed Home

In Atlanta, Georgia, WXIA-TV Channel 11 reports:

It's time to turn the table on landlords. They do background checks on you. We'd recommend you do background checks on them. Why? You could find yourself kicked to the curb after signing a lease. Shanitra Jones learned that the hard way. "When the foreclosure people came, I just started putting my stuff back in boxes because I knew that one day soon, I'd have to move," she told 11Alive's Center for Investigative Action.

Just days after signing her lease and paying $1000.00 to rent an Atlanta house, she got a knock on the door from Bank of America representatives, telling her the house had been foreclosed upon. The man who rented her the house, Eliot Harrison had signed the lease with her 3 days after Bank of America said it had full legal title to the property to sell the house at auction. So we knocked on his door to get Harrison's side of the story. "I don't want to talk about it," Harrison said, as he closed the door on us.

(1) Reportedly, Bank of America has offered the victimized tenant relief under the 'cash for keys' program. She has been offered $2000.00 and 2 months to find a new place to live. Harrison's case is now in the hands of the DeKalb County District Attorney and, despite repeated requests, he still hasn't offered us his side of the story, according to the story. Harrison had surrendered his Georgia real estate license following an investigation in 2007 on an unrelated matter. Click here to see the order from the Georgia Real Estate Commission.

Tampa Man Accused Of Commandeering Vacant Home For Sale & Renting It Out; Also Suspected Of Leasing Condos He Didn't Own To Unwitting Tenants

In Tampa, Florida, ABC Action News reports:

An ABC Action News investigation has uncovered a bizarre alleged real estate scam where a local man is accused of breaking into vacant homes and renting them out to unsuspecting victims.

***

Robert Smith got a call from one of his former neighbors about the home [...] he was trying to sell. "Congratulating me on selling my house. It had been on the market for a while," said Smith. It was good news all around. Not exactly. "So when she called I was like I haven't sold my house yet,” according to Smith.

Smith, a soldier at MacDill Air Force Base, went to the neighborhood and found a house full of people inside the home he hadn't sold yet. Once at the front door, a man came out, "...and he gives me this spiel about my partner and I have a business in Tampa and we rent houses and buy foreclosed homes then rent them out," said Smith. "What did you say when you told him you were the owner of the house?” We asked. “He didn't say anything," Smith responded.

His full name is Jackie Robinson Moore. Moore is now jailed after being charged by Hillsborough Sheriff's Deputies with Grand Theft, Dealing in Stolen Property, and Fraud. [...] We learned this may not be an isolated case. The management company, which runs a New Tampa condominium complex, said a man calling himself "J Moore" also leased 4-5 units he didn't own to unsuspecting renters.

Thursday, July 22, 2010

Nicole DePuy thought she was one of the lucky ones when she walked out of Harborside Event Center on Jan. 27 with a loan modification that would save her home from foreclosure. After waiting hours to talk to her lender at the highly publicized event, the 40-year-old speech-language pathologist had been approved for a trial with the Home Affordable Modification Program.

Under the government-sponsored program called HAMP, DePuy's mortgage payments were cut almost in half, dropping from $2,100 to $1,054. And best of all, under the terms of the program, all foreclosure action would stop. The scheduled sale of DePuy's Cape Coral home was prohibited under the terms of the agreement. "I thought my problems were over," DePuy said.

Nothing could be further from the truth. But DePuy didn't know that until John Moffatt of Isla Blue Development LLC put a note on her door March 31 telling her to call about her property. Moffatt told DePuy the company he represented had purchased her home in a foreclosure sale at the courthouse.

Roberta and Randall Strand thought they were getting a great deal on a foreclosure and helping their daughter and future son-in-law become homeowners. Instead they are holding a worthless second mortgage. The home they bought for just under $98,000 and fixed up for $25,000 is scheduled for a foreclosure auction [...] to satisfy a debt of more than $529,000. They offered lender Wells Fargo $75,000, but it was to no avail.

***

The Strands saw a newspaper notice last fall about the home, which is a mile from theirs, slated for a foreclosure auction. The unpaid debt was listed as $97,604. [...] Roberta looked up the property records. She saw there were two mortgages, a first and a second, recorded on the same date with the same lender. She figured the lender was auctioning the first and that the second mortgage would be wiped out. "The price was right," her husband said.

They took out a mortgage on their own home to make their offer. At the auction on the steps of the county Governmental Center in November, they were the only bidders. The house had been stripped, and they spent $25,000 on improvements -- windows, paint, carpet, lighting and appliances. In January, before Hayley and Bryan could take out a mortgage to pay them back, a notice arrived from Wachovia Bank, saying the previous owners owed $529,259 on their loan.

***

The family sued Wells Fargo, which acquired Wachovia, and Cal-Western Reconveyance, which posted legal notices of the sale, claiming deceit, fraud and wrongful foreclosure. They want their money back. The Strands' attorney, Steve Vondran of Newport Beach, argued that "Wells Fargo and Cal-Western have set up a system that allows them to mutually profit off the sale of worthless second mortgages."

Superior Court Judge Tim Volkmann granted a temporary restraining order halting the May 7 sale, then denied a motion for a preliminary injunction, saying the plaintiffs had not established a reasonable probability of success. This allows the sale to occur [] as scheduled. "They relied on their own mistaken beliefs and lack of diligence," Martin McGuinn, Cal-Western's attorney, noted in his written arguments. "Bidding at a foreclosure sale is a highly speculative endeavor."

He pointed out the plaintiffs admitted they knew Wells Fargo had two deeds of trust on the property and "decided on their own what interpretation to place on that information" without consulting Cal-Western.

"People Who Do It Are Going To Jail" Says DA As Couple Accused Of Stripping Fixtures From Their Foreclosed Home Face Grand Theft, Extortion Charges

In San Jaoquin County, California, the Stockton Record reports:

A married couple stand accused of stripping up to $100,000 in light fixtures, appliances, interior doors and more from their foreclosed Ripon home and then trying to sell the valuables back to the new owners. John and Janette Freitas face a three-count criminal complaint filed in San Joaquin County Superior Court charging them with grand theft, extortion and attempted extortion - all felonies.

***

San Joaquin County Deputy District Attorney Stephen Taylor said this is one in a stack of similar cases his office is filing against people who are up to such outlandish things as digging up trees and taking down fences while vacating their foreclosed homes.

"This is the kind of thing we're seeing, big and small, around the county," Taylor said. "People who do it are going to jail." Taylor said it is illegal to take items from a home under mortgage. He named off a long list of items the Freitases allegedly took, including the burglar alarm, wine cooler, built-in refrigerator, exterior lighting fixtures, shower doors and doorbell.

The couple went a step further - drawing extortion charges - when they tried to sell the removed valuables, some custom made, to the home's new owners for $50,000, the criminal complaint says. According to the arrest warrant, the Freitases lost their $1 million home [...] in Ripon last year to foreclosure.

You can help catch a thief. The city has launched a new program to immediately notify property owners when scammers try to steal their holdings with a phony deed or a bogus mortgage or lien.(1)

The Finance Department will send the alarm by e-mail, text message or letter to any owner who has filled out a simple online form at nyc.gov/finance. "It's free and it's a major step in our attack [on] this pervasive fraud," Finance Commissioner David Frankel said. "If you're notified of an unauthorized transaction, immediately call 311 and the matter will be referred to the appropriate law enforcement agency."

The new program comes 18 months after a Daily News reporter "stole" the Empire State Building, transferring the deed from the rightful owners to his own bogus corporation to illustrate how easy it is to commit deed and mortgage fraud.(2) The new deed was accepted and recorded by the city Register's Office - no questions asked - even though the notary and witness listed were fake.

(1) According to their website, the New York City Department of Finance Land Records Division will contact property owners who join the program whenever the following land documents are recorded against their real estate:

Hager and Brennan admitted falsifying information on loan applications so banks would approve mortgages that wound up in foreclosure. Hager worked at the J.P. Morgan Chase office in Myrtle Beach. Brennan worked at a Bank of America office in Myrtle Beach. U.S. District Judge Terry Wooden agreed to allow them to remain free until they are sentenced in about two months. Each face up to 30 years in prison. Hager and Brennan also face possible fines of up to $1 million each and could be ordered to pay restitution.

Wednesday, July 21, 2010

Buried in a recent story in The Baltimore Sun reporting on a $700K court award in favor of an Elliott City, Maryland woman who accused foreclosure rescue operator New Town Properties LLC, lender Royal Financial Services Inc, and their principal Robert Hurd of stealing the equity in her home through a sale leaseback, equity stripping ripoff is the following excerpt on another case involving this outfit:

Royal Financial's mortgage lender license has been revoked by the state commissioner of financial regulation, who found the company violated the state law in a separate foreclosure rescue scheme.

In that case, according to court documents, Hurd offered to refinance a defaulted loan for homeowners Woodrow Boyd Jr. and his wife, Cheryl, and then hours before the foreclosure sale, told them he couldn't refinance but could instead buy the home and lease it back to them.

A Baltimore County circuit judge in 2007 found Hurd in violation of the foreclosure protection law, and the couple got their house back with a new mortgage in their name, said [executive director of Baltimore-based Civil Justice Inc. Philip] Robinson, an attorney for the Boyds. Last month, the couple was awarded more than $104,000 in damages in a separate court case, he said.

Timothy Lynn Beliveau is polite and pleasant, his lawyer told the judge, and that’s a reason to think he might turn his life around. “Of course you’re pleasant and polite, you’re a con man,” retorted U.S. District Judge James Rosenbaum. Con men who aren’t polite, the judge noted, tend to starve.

Beliveau, 42, of Mound, used the proceeds to pay for boats, mansions and diamonds. He admitted to tax evasion and money laundering charges, but his attorney argued in court papers that the scheme was related to Beliveau's ultimately failed effort to rescue his businesses. Rosenbaum didn't buy it. He accused Beliveau of trying to pull one over on the court. "You knew from the get-go that this was nothing but a fraud." Beliveau, who had already apologized, mumbled a protest - "I'm responsible for this." "You're not responsible," the judge shot back. "You're guilty."

Beliveau's attorney asked the judge to let him serve his time in a South Dakota federal pen. Denied. Beliveau's attorney asked the judge to give him one more month to get his affairs in order. Denied. “Grow up,” the judge told him. “It’s time to live a better life.” Beliveau put his hands behind him, accepted the handcuffs from a federal marshal and walked through a door in the side of the courtroom.

Attorney Michael Monico said the next six months will be difficult for his client James Garofalo, of Homewood. The former Homewood village trustee and local businessman was sentenced Monday to six months in prison for his role in a mortgage fraud scheme that included houses in several Southland communities.(1) [...] Garofalo, who runs The Egg & I restaurants in Chicago Heights and Tinley Park and whose family recently opened Grady's Grill in Homewood, pleaded guilty in 2009 to two counts of wire fraud.

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Sentencing guidelines advised a minimum prison sentence of 3 years and 5 months for Garofalo, but [U.S. District Judge Wayne] Anderson said he sought a sentence that would send a message about the seriousness of Garofalo's crime but not cripple his ability to pay restitution to the lenders who were the victims of the scheme.

"The (Egg & I) may disappear if I give you 41 months," Anderson said. "We want to see the business continue to operate and restitution to continue." Garofalo told the judge he has already paid about $250,000 in restitution - which included his recent income tax refund and his cashed-in IRA.

Assistant U.S. Attorney Daniel May argued that Garofalo should not be allowed to "buy" his way out of jail. Anderson said a person should get points for paying back victims because it mitigates prior bad acts. The judge also credited Garofalo for cooperating in other cases involving the mortgage fraud scheme, and for contributing to needy causes through his restaurant business. "That's worth something," he said.

(1) Reportedly, U.S. District Judge Wayne Anderson also gave Garofalo two years of probation, 300 hours of community service and ordered him to undergo alcohol treatment. According to the story, Garofalo, as co-owner of the now-defunct, Olympia Fields-based Madison Homes Partnership homebuilders, was charged with selling eight new and existing homes to straw buyers at inflated prices. Prosecutors reportedly said about $5.2 million was taken out in loans on the eight houses, but the straw buyers had no intention of living in the homes or paying back the mortgages, and that after the homes went into foreclosure and were resold, lenders wound up hosed for approximately $1.3 million.

Tuesday, July 20, 2010

BofA Accused Of Another Foreclosure Screw-Up; Northern California Couple Say They Never Missed A Payment, Claim Bank Wasn't Even Their Lender

In Kenwood, California, The Press Democrat reports:

Keith and Julie Hanover felt like someone was trying to steal their home. Bank of America had started foreclosure proceedings on their house in Kenwood. Yet the Hanovers had never missed a mortgage payment. In fact, Bank of America wasn't even their lender.

The nation's largest bank appears to have mistakenly determined it owned their loan due to a clerical error resulting when another mortgage company collapsed and was taken over by the federal government, according to court records. The Hanovers spent seven months hounding and pleading Bank of America to fix the mistake. But none of the numerous bank representatives they contacted was able to solve the problem.

"It's like their foreclosure process is on auto pilot," Keith Hanover said. "It starts and there is nothing anyone can do to stop it." Finally, distraught and exhausted, the couple hired a Santa Rosa attorney who got a court injunction to stop the auction of their home set for 11:30 a.m. April 30 on the Sonoma County courthouse steps. "You're just losing your mind," Keith Hanover said. "We had never even missed a mortgage payment."

***

The couple filed a lawsuit in Sonoma County Superior Court to stop the bank from seizing their home. "When they came and were literally going to pull our house from underneath us, we knew we had to sue," Keith Hanover said. [...] For the Hanovers, anxiety over the situation is still a daily presence. "You can't help but wonder what is going to happen. It just wears you down," Keith Hanover said. "The whole lending industry is such a mess. And it is affecting everyone in the country."

Legally Blind 89-Year Old WW II Vet Faces Boot From NYC Residence Of 40+ Years After Being Victimized In Home Equity Refinancing Ripoff

In Springfield Gardens, Queens, the New York Daily News reports:

World War II veteran Lucius Dorsey thought he'd seen the worst in people after being stationed in the Pacific in 1942. Now, more than 40 years after leaving the Navy, the legally blind 89-year-old vet is fighting a nasty battle on the home front.

Dorsey is the victim of a deed theft scam and is battling eviction from the Springfield Gardens, Queens, home he bought in 1969. "Someone is trying to steal from us," said Dorsey, who lives with his wife and two sons. "I'm blind. I can't understand it."

The scammer accused of preying on the Dorseys in 2007 is Allen Robinson - a person Dorsey's wife, Wanda, 52, thought was a "friend with good credit." But instead of helping them refinance, Robinson had the deed transferred into his name. "They did not know that they were actually signing away their title to the property," said Wendy Dolce, a lawyer from the City Bar Justice Center. Robinson is now in an upstate prison - not for scamming the Dorseys, but for drug possession, records show.

Most deed theft scammers zero in on their victims by checking foreclosure listings, which are a matter of public record. "If the person is crafty enough, they shove 100 papers in front of your face and say, 'Sign here to get rid of your problem.' Somewhere in that pile of papers they sign away their deed," said Daniel George, a counselor at Neighborhood Housing Services of Jamaica.

Robinson paid off the Dorseys' mortgage and took out a larger one, property records show. Then he "pocketed the cash and disappeared," Dolce said. The Dorseys are appealing the sale of their foreclosed home in hope of negotiating a mortgage rate they can afford. The trouble is Robinson took out the last mortgage, so the Dorseys aren't customers of EMC Mortgage Corp., which initiated the foreclosure. "My husband spent half of his life here," Wanda Dorsey said. "He did nothing wrong. He doesn't deserve this."(1)

(1) Support in New York case law for the proposition that a title transfer as described in this story where the homeowner is tricked into signing over a deed is subject to being voided and set aside can be found in Marden v. Dorthy, 160 N.Y. 39; 54 N.E. 726 (N.Y. 1899), in which the New York Court of Appeals, the state's highest court, set aside a similarly obtained title to real estate, and ruled that a subsequent mortgage placed on the property to be unenforceable. The court held that the instruments were void because the property owner never intended to convey her property and because the false instruments were not converted into genuine instruments by the act of recording.

Further, whether the deed transfer described in the New York Daily News report is absolutely void (ie. void ab initio), or merely voidable should be of no consequence in also voiding the subsequent mortgage placed upon the property at the time of the ripoff.

If the transfer is found to be void ab initio, the mortgage will automatically be absolutely void as well.

Should the conveyance be found to be merely voidable (as opposed to being absolutely void), the lender who unwittingly financed the ripoff could avoid having its lien voided and set aside if, and only if, it can establish that it was a bona fide purchaser / encumbrancer at the time of making the loan. In this case, because the victimized homeowner never relinquished possession of the home, the lender had the duty to inquire of those in possession as to any unrecorded rights or equities they may have in the property. The lender's failure to make any inquiry into the rights of the victimized family, who were in possession at the time the mortgage was made, leaves its mortgage susecptible to being voided. See Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109 (NY 1890):

"Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish."

In the desperate battle to end New York's home foreclosure crisis, a windowless storage closet in a Queens courthouse serves as ground zero. The 6-feet-by-10-feet room has been turned into a conference room where banks and homeowners meet to work out their differences in a new statewide program aimed at keeping debtors from losing their homes.

***

Parents have shown up with kids in strollers, says Tracy Catapano-Fox, chief law clerk to the court's administrative judge. [...] Every week, about 250 to 300 conferences fill the calendar. The converted storage closet - repainted in March when Mayor Bloomberg visited to announce free legal services for the conferences - is now used on Mondays and Tuesdays. "That shows how desperate we are for space," Catapano-Fox says.

Monday, July 19, 2010

A ruling in Atlantic County by a state Superior Court judge may make foreclosure filings there and in Cape May County more difficult for lenders, requiring them to show they actually possess the mortgage note at the time they file. [...] Judge William C. Todd III ruled on June 29 that Bank of New York had “failed to establish that it was entitled to enforce the note as of the time the complaint was filed” and prevented it from proceeding with foreclosure.(1) The $1.38 million mortgage was for a beach-block house in Brigantine, and the foreclosure proceeding was challenged by the borrowers, investors Roman Krywopusk and Michael Raftogianis, both of Perkionmenville, Pa.

***

Eric Garrabrant, 38, of Linwood and the attorney with the Flaster Greenberg office there who represented Krywopusk, said that Bank of New York hadn’t indicated yet whether it would refile or appeal Todd’s ruling. He said the significance of the case was that in the Atlantic and Cape May counties jurisdiction of Todd, banks could no longer simply show that a mortgage had been assigned to them when foreclosing on a property.

“From now on, if you demand that the bank demonstrate how it owns the note and mortgage, the transaction by which they acquired it, and had ownership on the date the foreclosure complaint was filed, in Cape May and Atlantic counties they’re going to have to do that,” Garrabrant said. If the case is appealed and upheld on appeal, the requirement could be applied throughout the state, he said.

(1) According to the story, Todd ruled that Bank of New York can “institute a new action to foreclose at any time, provided that any new complaint must be accompanied by an appropriate certification ... confirming that plaintiff is in possession of the original note as of the date any new action is filed.”

A former Southeast lawyer who served as a Patterson library trustee and on the Putnam Arts Council is being held in the Putnam County jail awaiting sentencing on the theft of $339,000 from a real estate closing. Jane Y. Posner, 60, the wife of former Patterson councilman and attorney Martin Posner, has admitted taking the money but the reason she might face up to 15 years in prison is she refuses to say what she did with it. Posner pleaded guilty Jan. 12 to second-degree grand larceny.

"We offered her the opportunity to pay restitution in exchange for a reduced sentence. But she failed to accept the offer and never indicated where the money went, so we are asking for five to 15 years," county District Attorney Adam Levy said. He said Posner, who lives in a spacious home on Alexander Drive and recently celebrated her 40th wedding anniversary while behind bars, only came up with $4,000 toward restitution.

***

The New Jersey-based Corcoran Law Group had Posner stand in for them at the closing, where she was given a $339,719 check that was supposed to go to the lender. Instead, she deposited it into her own account and sent the Corcoran Group a $339,719 check from her escrow account then stopped payment on it. The law firm later sued her for legal malpractice in a case that's pending.

Martin Posner said he believes his wife deserves leniency. Given five years probation, he and his wife could repay the money, he argued, but [County Court Judge James] Reitz wanted $50,000 up front, which they don't have, he said.

Ms. Posner is aware that this Court, in any order permitting her to resign, could require her to make monetary restitution to any person whose money or property was misappropriated or misapplied or to reimburse the Lawyers' Fund for Client Protection.

Apparently, The Lawyers’ Fund For Client Protection Of the State of New York, whose mission, according to their website, is "to protect legal consumers from dishonest conduct in the practice of law, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, to promote public confidence in the administration of justice in the Empire State," may have been left on the hook for making some reimbursement for the theft of the escrow money in this case. This fund, in effect, operates as the state's "attorney ripoff reimbursement fund."

For information on "attorney ripoff reimbursement funds" in other states and Canada, see:

The [Federal Housing Finance Agency] announced last Monday that it had issued 64 subpoenas to a throng of unidentified financial services institutions, seeking documents related to mortgage securities that Fannie and Freddie bought from Wall Street during the boom years.

The subpoenas are designed to tell the agency what many of us want to know: How did Wall Street package and sell private-label mortgage securities to investors, even though the nature and quality of some of the loans crammed inside those tidy little packages were, at best, suspect?

Once that question has been answered, Fannie and Freddie can force the institutions that sold the securities to repurchase the improper loans, allowing taxpayers to recover some of the losses they’ve swallowed on Fannie’s and Freddie’s federal bailout.

***

During 2006-7, these entities bought $294 billion of so-called private-label securities. Not all of these purchases are under scrutiny, the agency said. It is clearly turning up the heat on the major players in mortgage servicing and securitization. Among the bigger trustees in the business are Deutsche Bank and the Bank of New York, while loan servicers include Bank of America and many more. None of the banks would confirm if they had received subpoenas.

Sunday, July 18, 2010

Title Insurance Underwriter Files Suit In Attempt To Wiggle Out Of Liability For Actions Of Alleged Sticky-Fingered Closing Agent In R/E Escrow Ripoff

In Dothan, Alabama, the Dothan Eagle reports:

An insurance company is asking a federal judge to rule it should not be held responsible for covering the losses incurred by several families through alleged misconduct from an area title company. Tudor Insurance Company, through documents filed in U.S. District Court, claims its insurance policy with Dothan’s Title Pro Closings covers only errors, omissions and negligent acts, not criminal or fraudulent acts.

Former Title Pro Closings manager Tammy Lynn Peters has been charged with nine counts of first degree theft of property and is listed as a defendant in at least six civil lawsuits. Peters was employed with Title Pro and her duties included closing of certain loans and disbursement of loan proceeds at closings.

An audit of Title Pro revealed that funds were missing, misappropriated or misapplied and, as a consequence, several customers of Title Pro learned that their prior mortgages had not been satisfied. Combined losses of several hundred thousand dollars have been alleged. Tudor includes its policy with Title Pro Closings in court documents, which, in part, states “Coverage under the policy does not apply to any loss in connection with or arising out of or in any way involving ... the committing in fact of any criminal or fraudulent act.” “Pursuant to the terms and provisions of Tudor’s policy of insurance, there is no coverage for Title Pro Closings, LLC and (Tammy) Peters for the claims alleged in the underlying lawsuits ...,” Tudor states in court documents.

Attorneys for the families, however, claim the cases against Peters are still young and it is too early to determine Tudor’s claim. “The Plaintiffs in the underlying tort actions used Title Pro to handle their real estate closings. Title Pro was responsible for taking the proceeds from the sale of the Plaintiffs’ property and applying those proceeds to the purchase of their homes. Those Plaintiffs learned that such proceeds were not so applied, some when they received foreclosure notices. The Plaintiffs do not pretend to know, at this early stage of the discovery process, exactly how this omission came about. They only know that Title Pro had an absolute duty to see to it that the proceeds at the closings were applied to their purchases, and this did not occur,” Matt Glover, attorney for the families, stated in a response to Tudor’s claim.

“The Plaintiffs have asserted claims for breach of contract, negligence, and fraud in connection with this omission. Tudor Insurance, in its declaratory action, invites this Court to make a factual determination that Title Pro’s failure to properly apply the proceeds to the Plaintiffs’ purchases resulted from intentional, criminal conduct on the part of its insured. This Court should decline that invitation,” Glover added. No ruling has been made at this time.

Recently Refinancing Homeowner/Couple Gets Hit With Notices From Two Different Lenders, Both Claiming To Hold Their Promissory Note

In Wichita, Kansas, KWCH-TV Channel 12 reports:

Debbie Weber says it’s consumed her life. “I was spending four and five days a week… hours working on this. My husband would come home and see me on the floor with papers and say Debbie you got to stop this,” says Weber.

The Webers, tight on money, decided to refinance their home. Things went smoothly until two statements, from two different companies, for two different amounts arrived in the mail. She didn't know who to pay and risked losing her home. “I wasn't going to take this lying down. This is our home they're messing with.” Because she fought back, Debbie discovered something that surprised her even more. Neither company can even prove they own her loan.

For more, see Who owns my loan?(Butler County couple fight to keep their home after refinancing. Two lenders both claim to have their loan).

A financial advisor is facing federal charges and decades in prison for allegedly stealing her clients' life savings to fund a lavish lifestyle. South Lake Tahoe resident Lori Zoval, 45, has been accused by the Department of Justice of stealing at least $500,000 and concealing the crime by sending her clients false documents and paperwork.

***

Holly Eimer said her nonprofit organization, Tahoe Helping Hands, was leveled by Zoval's actions. Eimer, who suffers from multiple sclerosis, said she dreamed of opening an ADA-compliant resort for disabled people and their pets, and took out a $200,000 equity loan to pay for fundraising on Zoval's advice. Eimer said the money quickly disappeared, along with Zoval. Some of Eimer's property was eventually lost to foreclosure.

Tenants Fear More Of The Same As They Struggle To Hang On In Dilapidated Bronx Building Sold For 3rd Time In Four Years

In The Bronx, New York, Crain's New York Business reports:

[Martha] Castro has called Apartment B on the ground floor of 1585 E. 172nd Street home for 22 years. Conditions were never perfect, but rats, leaking pipes and frigid, heatless winter nights turned into chronic problems around four years ago, not coincidentally just as the real estate bubble swelled.

That's when a new business model emerged in city real estate, especially in the Bronx. Investors looking for big returns swooped in to buy Ms. Castro's apartment building and others just like it, taking over from traditional landlords who had been content with the steady income produced by the apartments' stabilized rents. Focused on raising rents and making a quick killing, these speculators badly miscalculated. They overpaid, leaving nothing on the table to pay for maintenance and repairs.

Ms. Castro's building has had the misfortune of cycling through two such owners in four-plus years. Now, the little-known Bluestone Group has stepped forward to buy the debt on the building and five others in the same portfolio, forking over an estimated $10 million. The question on tenants' minds: Will Bluestone prove their savior, or are they destined for another excruciating cycle of neglect? Early indications have them worried.(1)

For more, see The new guys(Bronx slum gets third owner in four years. Can this one succeed where others failed?) (if link expires, try here, then click link for the story).

(1) According to the story, among those who have invested with Bluestone are Joseph Friedman and Sol Gross, executives whose extensive Pilgrim Icahn network of transitional homeless housing was cited by Comptroller John Liu earlier this year for hazardous conditions and for reaping $4.3 million in fiscal 2008 to house clients longer than they were supposed to stay in their facilities. Among the hazardous conditions were rodent droppings and roach infestation, leaking pipes, moldy walls and entrance doors without locks, the story states. The tenants worry that Bluestone's ties to Mr. Friedman could mean the firm wants to turn the properties into homeless housing, which can produce more income than stabilized rents, according to the story. “There is no way they can make their money on these units with anything short of a homeless voucher,” one prominent real estate executive reportedly said.

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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